British Airways revamps operations, vows to stay competitive

DUBAI — Vowing to stay competitive in the face of growing challenges from Virgin Atlantic and some low-cost carriers on the Gulf routes, British Airways said it has put into place a new organisational structure to streamline its operations in Middle East and Pakistan region.

By Isaac John

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Published: Thu 28 Sep 2006, 8:47 AM

Last updated: Sat 4 Apr 2015, 1:24 PM

British Airways' newly appointed Commercial Manager for the Middle East and Pakistan, Paul Starrs, however, said reducing the head count was not the objective of the restructuring exercise which was primarily aimed at increasing operational efficiency and profit margins. He said by reducing operational costs and developing channel selling, the carrier seeks to achieve 10 per cent operational margin.

"A structure has been put in place in an effort to streamline our operations while still maintaining our award-winning premium service and giving our customers and trade partners contact with experts in each field," he said.

Starrs said the carrier was facing a hike of £600 million in fuel bills to £2.2 billion this year. His estimate is £200 million more than the forecast made by the carrier in March this year.

On facing the challenge of lower ticket prices offered by rival carriers in the Gulf sector, he said British Airways would "ensure that we remain competitive. We are confident in our product. However, we are constantly reviewing our prices."

He said the entry of more players would not impact British Airways operations in the region "as the market is growing and there is a lot of demand."

Starrs said the airline will boost operations on the UAE-London sector from 21 to 24 weekly flights during the winter.

"Although this is my first position in the Middle East, I plan to utilise what has worked well in my previous posts and apply these successful principles to our selling model in the region while ensuring we tailor our operations to the specific requirements of this area," explained Starrs.

British Airways, which carries around 36 million passengers worldwide, currently operates 14 weekly flights to London Heathrow from Dubai, and will introduce a further three weekly flights from the end of October. The airline also operates daily from Abu Dhabi to the UK capital's principal airport.

Ruling out any new market forays in the region Starrs said the airline, which owns a fleet of 289 aircraft, suffers from capacity restriction. "We have no new aircraft on order at present. So imminent expansion of our operations is not in the pipeline."

Asked if British Airways, a member of the Oneworld Alliance comprising seven global carriers, would seek to enrol new members, Starrs said such a move was not under consideration. The Oneworld network, including American Airlines, Qantas, Cathay Pacific, Iberia, Finnair and Aer Lingus, currently serves 600 destinations in 132 countries.

In March this year, British Airways, facing tough competition from budget airlines and coping with surging fuel costs, said it planned to reduce expenses by £450 million over the next two years in a move that was likely to lead to further job losses. The carrier also said that its fuel bill for 2006-7 was forecast to rise by £400 million, to £2 billion, raising the possibility of further fuel surcharge increases on passengers' tickets. The airline confirmed that the new cost-cutting plan could lead to job losses, which would be in addition to cuts already announced. The carrier said in November that it would reduce its management force by 35 per cent, or about 600 jobs, by 2008 as part of an earlier bid to trim costs by £300 million.

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